Contractors Payment Delay And Its Impact On Road Projects Administered Under Ethiopian Roads Authority

Ethiopia has given special attention for development of the road sector. In this regard, thernEthiopian Roads Authority (ERA) has been given the responsibility to procure, regulate, andrnadminister construction works and consultancy services. For ERA, to competently dischargernthese responsibility, it is essential that those members of ERA responsible for the projectrnmanagement to have a complete understanding of the Technical, Contractual and Financialrnaspects of the project. As part of these competence and capability, ERA is expected to haverneffective budget allocation and utilization system. However, ERA has usually faced difficulty inrnpaying due payments on time to the Contractors and Consultants. As a result of this, thernContractor’s cash flow status have been affected, and, ultimately it results in delay inrnconstruction, quality related problems, late interest payment, increase in construction cost, andrnother cases of Contractor’s claim on a project.rnThis research work, therefore, focuses on identifying the causes and impacts of delay inrnContractor’s payment on road projects administered under ERA based on randomly selected sixrnroad projects in which late interest payment has been effected and questionnaire based surveyrnwith engineers from ERA, Contractor and Consultant and; subsequently, the detailed sources ofrnthe delay, potential impacts, and possible remedial measures were identified.rnAccordingly, it was found that ineffective budget allocation and utilization is the major cause forrndelay in Contractor’s payment and delay in progress of the physical works, reduced quality inrnconstruction works, increase in frequency of workmanship problems, insufficient resourcernarrangements, inability to comply Environmental, Health, Safety and Social Managementrnrequirements, and increase in construction and supervision cost of project were some of impactsrnof delay in Contractor’s Payment.rnTo this respect, as a major outcome of the study, it has been arrived that maximizing the efficiencyrnof design, the actual performance of the Contractors, information on past performance of Contractors andrnresource allocated on the project site and capacity of Professionals working at Planning and Program andrnImplementation directorate are very critical matters to plan and allocate sufficient fiscal year budget byrnthe client so that occurrence of Contractor’s payment Delay.

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